What is the GENIUS Act stablecoin loophole?

The GENIUS Act bans stablecoin issuers from paying interest directly. However, crypto exchanges reward holders through third-party arrangements, which banks argue circumvents the law's intent.

Why do banks want GENIUS Act changes?

Banks fear high-yield stablecoin rewards will pull deposits away from traditional accounts. The Bank Policy Institute estimates this could drain $6.6 trillion from the banking system.

How does China's digital yuan threaten U.S. dollar dominance?

China now pays interest on its digital yuan. Crypto executives argue that restricting American stablecoin yields would make China's e-CNY more attractive to global users.

When does the GENIUS Act take full effect?

Regulators must finalize implementing rules by July 2026. Full enforcement begins January 2027.

Crypto Execs Call Bank Lobby's GENIUS Act Changes a 'National Security Trap

Jake

Jan 8, 2026

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5 min read

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Crypto Regulation Genius Act Stablecoin Regulation US Crypto Law

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